Important Terms

Important terms in Marketing Management

1. Administered Vertical Marketing System: An arrangement that coordinates distribution activities through the market and/or economic power of one channel member or the shared power of two channel members.

It can also be said that, it is a system in which the channel members, while retaining much of their autonomy, are informally coordinated in their marketing activities by the dominant member of the channel. Dominance is achieved through the exercise of political or economic power rather than through outright ownership.

Contractual Channel System / Contractual Vertical Marketing System: A system in which independent channel members at two or more levels have entered into formal agreements to coordinate their marketing efforts in an attempt to take advantage of the economies of scale. Contractual vertical marketing systems are generally of three types: i. Voluntary chains, ii. Retail cooperatives, and iii. Franchisee operations.

Corporate System / Corporate Vertical Marketing System: A system in which a large corporation controls two or more levels of a marketing channel. For example, a manufacturer may own the distribution facilities for his product as well as the retail outlets through which it is sold.

2. Advertising: All activities involved in presenting to an audience a nonpersonal, sponsor-identified, paid-for message about a product/service of an organization.

3. Advertising Agency: An independent company that provides specialized advertising services and may also offer more general marketing assistance.

4. Advertising Media: The communication vehicles (such as newspapers, radio, television etc) that carry advertising as well as other information and entertainment.

6. Marketing Plan: A written document that presents the master blueprint for a year’s marketing activity for a specified organizational division or major product.

7. Automatic Vending: A form of nonstore retailing where the products are sold through a machine with no personal contact between the buyer and seller.

8. Banner Ad: A boxed-in promotional message often appearing at the top of a web page.

9. Behavioural segmentation: Market segmentation based on consumers’ product-related behaviour, typically the benefits desired from a product and the rate at which the consumer uses the product.

10. Brand: A name and/or mark intended to identify and differentiate the product of one seller or a group of sellers.

11. Brand mark: The part of a brand that appears in the form of a symbol, design, or distinctive colour or types of lettering.

12. Brand Name: The part of a brand that can be vocalized-words, letters, and/or numbers.

13. Broker: A middleman who brings buyers and sellers together and provides market information to either party and that ordinarily neither physically handles products being distributed nor works on a continuing basis with those sellers or buyers.

14. Business Analysis: It is one of the stages in the new product development process which consists of several steps to expand a surviving idea into a concrete business proposal.

15. Buying Motive: The reason why an individual or an organization buys a specific product or makes purchases from a specific firm.

16. Channel Conflict: A situation in which one channel member perceives another channel member to be acting in a way that prevents the first member from achieving.

17. Comparative Advertising: A form of selective-demand advertising in which an advertiser either directly (by naming a rival brand) or indirectly (through inference) points out the differences among competing brands.

18. Consumer buying-decision process: The series of logical stages, which differ for consumers and organizations, that a prospective purchaser goes through when faced with a buying problem.

19. Cost-plus pricing: A major method of price determination in which the price of a unit of a product is set at a level equal to the unit’s total cost plus a desired profit on the unit.

20. Countertrade: An arrangement under which domestically made products are traded for imported goods.

21. Culture: A complex of symbols and artifacts created by a society and handed down from generation to generation as determinants and regulators for human behaviour.

22. Customer Relationship Management (CRM): An ongoing interaction between a buyer and a seller in which the seller continuously improves its understanding of the buyer’s needs, and the buyer becomes increasingly loyal to the seller because his needs are being so well satisfied.

23. Decline stage: The fourth, part of a product life cycle during which the sales of a product drops.

24. Delphi Method: A forecasting technique, applicable to sales forecasting, in which a group of experts individually and anonymously assess future sales, after which each member has the chance to offer a revised assessment as the group moves toward a consensus.

25. Demand Forecasting: The process of estimating sales of a product during some future period.

26. Demographic segmentation: Subdividing markets into groups based on population factors such as size, age, and growth.

27. Department store: A large-scale retail institution that has a very broad and deep product assortment, tries not to compete on the basis of price, and offers a wide array of customer services.

28. Diffusion: A process by which an innovation spreads throughout a social system over time.

29. Direct distribution: A channel consisting only of producer and final customer, with no middlemen providing assistance.

30. Direct marketing: A form of nonstore retailing that uses advertising to contact consumers who, in turn, purchase products without visiting a retail store.

31. Direct selling: A form of nonstore retailing in which personal contact between a sales person and a consumer occurs away from a retail store. Sometimes called in-home selling.

32. Discount store: A large-scale retail institution that has a broad and shallow product assortment, low prices, and few customer services.

33. Distribution channel: The set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or business user.

34. Drop shipper: A merchant wholesaler that does not physically handle the product being distributed, but instead sells merchandise for delivery directly from the producer to the customer. Same as desk jobber.

35. Early adopters: A group of consumers that includes opinion leaders, is respected, has much influence on its peers, and is the second group (following the innovators) to adopt an innovation.

36. Economic environment: A set of factors, including the business cycle, inflation, and interest rates, that affect the marketing activities of an organization.

37. 80-20 principle: A situation in which a large proportion of the total orders, customers, territories, or products account for only a small share of the company’s sales or profit, and vice-versa.

38. Electronic Commerce: The buying and selling of goods and services through the use of electronic networks.

39. Family branding: A strategy of using the company name for branding purposes.

40. Family-life-cycle stage: The series of life stages that a family goes through, starting with young single people, progressing through married stages with young and then older children and ending with older married and single people.

41. First – mover advantage: Strategy of entering a market during the introductory stage of a product in order to build a dominant position; also called pioneer advantage.

43. Franchising: A type of contracatual vertical marketing system that involves a continuing relationship in which franchiser (the parent company) provides the right to use a trademark plus various management assistance in return for payments from a franchisee (the owner of the individual business unit).

44. Gray marketing: Practice of buying a product in one country, agreeing to distribute it in a second country but diverting it to a third country; also called export diversion.

46. Label: The part of a product that carries information about the product and the seller.

47. Laggards: A group of tradition-bound consumers who are the last to adopt an innovation.

48. Leader pricing: A pricing and promotional strategy in which temporary price cuts are made on a few items to attract customers.

49. Mail survey: A method of gathering data by mailing a questionnaire to potential respondents, and asking them to complete it and return it by mail.

50. Market-aggregation strategy: A plan of action under which an organization treats its total market as a single segment – that is, as one mass market whose members are considered to be alike with respect to demand for the product – and thus develops a single marketing mix to reach most of the customers in the entire market. Same as mass market strategy and undifferentiated market strategy.

51. Market penetration strategy: A strategy in which the initial price of a product is set low in relation to the target market’s range of expected prices.

52. Market potential: The total sales volume that all organizations selling a product during a stated time period in a specific market could expect to achieve under ideal condition.

53. Market segmentation: The process of dividing the total market for a good or service into several smaller groups, such that the members of each group are similar with respect to the factors that influence demand.

54. Market share: The proportion of total sales of a product during a stated period of time in a specific market that is capturedby a single firm.

55. Market-skimming pricing: A strategy in which the initial price of a product is set high in relation to the target market’s range of expected prices.

61. Personal selling process: The logical sequence of prospecting, preapproach, presenting, and postsale services that a sales person takes in dealing with a prospective buyer.

62. Physical distribution: All the activities involved in the flow of products as they move physically from producer to consumer or industrial user. Same as logistics.

63. Positioning: A product’s image in relation to directly competitive products as well as other products marketed by the same company. Alternatively, a firm’s strategies and actions related to favourably distinguishing itself from competitors in the minds of selected groups of consumers. Same as product positioning.

64. Price: The amount of money and/or other items with utility needed to acquire a product.

65. Price competition: A strategy in which a firm regularly offers products priced aslow as possible, usually accompanied by a minimum of services.

66. Price war: A form of price competition that begins when one firm decreases its price in an effort to increase its sales volume and/or market share, the other firms retaliate by reducing prices on competing products, and additional price decreased by the original price cutter and/or its competitors usually follow.

67. Product life cycle: The aggregate demand over an extended period of time for all brands comprising a generic product category.

68. Product line: A broad group of products intended for essentially similar uses and having similar phyical characteristics.

69. Promotion: The element in an organisation’s marketing mix that serves to inform, persuade, and remind the market of a product and/or the organization selling it in the hope of influencing the recipients’ feelings, beliefs, or behaviour.

70. Promotional mix: The combination of personal selling, advertising, sales promotion, public relations, and publicity that is intended to help an organization achieve its marketing objectives.

72. Publicity: A special form of public relations that involves any communication about an organization, its products, or its policies through the media that isnot paid for by the sponsoring organization.

73. Public relations: Communication efforts that are designed to favourably influence attitudes toward an organization, its products and its policies.

74. Pull strategy: Promotional effort directed primarily at end users so they will ask middlemen for the product.

75. Push strategy: Promotional efforts that directed primarily at middlemen that are the next link forward in the distribution channel for a product.

76. Reference group: A group of people who influence a person’s attitudes, values and behaviour.

77. Repositioning: Reestablishing a product’s attractiveness in the target market.

78. Retailing: The sale, and all activities directly related to the sale, of goods and services to ultimate consumers for personal, nonbusiness use. Same as retail trade.

79. Sales forecast: An estimate of probable sales for one company’s brand of a product during a stated time period in a specific market and assuming the use of a predetermined marketing plan.

80. Sales potential: The portion of market potential that a specific company could expect to achieve under ideal condition.

82. Service: An identifiable, intangible activity that is the main object of a transaction designed to provide want satisfaction to customers.

83. Service quality: The degree to which an intangible offering meets the expectations of the customer.

84. Situation analysis: The act of gathering and studying information pertaining to one or more specified aspects of an organization. Alternatively, a background investigation that helps in refining a research problem.

85. Social class: A division of, or ranking within, society based on education, occupation, and type of residential neighbourhood.

86. Societal marketing concept: A revised version of the marketing concept under which a company recognizes that it should be concerned about not only the buyers of its products but also other people directly affected by its operations and with not only tomorrow but also the long term.

87. Specialty store: A type of retail institution that has a very narrow and deep product assortment (often concentrating on a specialized product line or even part of a specialized product line), that usually strives to maintain manufacturers’ suggested prices, and that typically provides atleast standard customer services.

88. Sub-culture: Groups in a culture that exhibit characteristic behaviour patterns sufficient to distinguish them from other groups within the same culture.

89. Supermarket: A type of retail institution that has a moderately broad and moderately deep product assortment spanning groceries and some nonfood lines, that offers relatively few customer services, and that ordinarily emphasizes price in either an offensive or defensive way.

90. Supply chain management: The combination of distribution channels and physical distribution to make up the total marketing system.

91. SWOT Analysis: It is identifying and evaluating an organisation’s most significant strengths, weaknesses, opportunities and threats.

92. Target market: A group of customers (people of organizations) for whom a seller designs a particular marketing mix.

93. Telemarketing: A form of nonstore retailing in which a sales person initiates contact with a shopper and also closes the sale over the telephone.

94. Telephone survey: A method of gathering data by interviewing people over the telephone.

95. Test marketing: A method of demand forecasting in which a firm markets its new product in a limited geographic area, measures the sales, and then – from this sample – projects the comopany’s sales over a larger area. Alternatively, a marketing research technique that uses this name approach to judge consumers’ responses to a strategy before committing to a major marketing effort.

96. Trademark: A brand that has been adopted by a seller and given legal protection.

97. Value chain: The combination of a company, its suppliers, and intermediaries, performing their own activities to add value to a product.

99. Wholesaling: The sale, and all activities directly related to the sale, of goods and services to businesses and other organizations for resale, use in producing other goods and services, or the operation of an organization.

100. Environmental Scanning: The process of gathering information regarding a company’s external environment, analyzing it, and foreasting the impact of whatever trends the analysis suggests. Same as environmental monitoring.

Important terms in Human Resource Management/ Personnel Management

Human Resources

The total knowledge, skills, creative abilities, talents and aptitudes of an organisation’s workforce, as well as the value, attitudes and beliefs of individuals involved

Human Resource Management (HRM)

HRM refers to a set of programmes, functions and activities designed and carried out in order to maximise both employee as well as organisational effectiveness.

Human Resource Management is a function of guiding human resources into a dynamic organisation that attains its objectives with a high degree of morale and to the satisfaction of those concerned.

HRM is that phase of management which deals with the effective control and use of manpower as distinguished from other sources of power.

The management of human resources is viewed as a system in which participants seeks to attain both individual and group goals.

The objective of HRM is to understand what has happened and is happening and to be prepared for that will happen in the area of working relationships between the managers and the managed.

Manpower/Human Resource Planning

It is the process of determining manpower requirements and the means for meeting those requirements in order to carry out the integrated plan of the organisation.”

Job Analysis

Job analysis is the process of determining, by observation and study, and reporting pertinent information relating to the nature of s specific job. It is the determination of the tasks which comprise the job and of the skills, knowledge, abilities and responsibilities required of the worker of a successful performance and which differentiate one job from all others

Job Description

It is an organised, factual statement of the duties and responsibilities of a specific job. In brief it should tell what is to be done, how it is done and why? It is a standard of function, in that it defines the appropriate and authorised content of a job.

Job Specification

Job specification or man specification or employee specification is a statement of the minimum acceptable human qualities necessary to perform a job properly. In contrast to the job description it is a standard of personnel and designates the qualities required for acceptable performance.

Job Evaluation

Job evaluation is an attempt to determine and compare demands which the normal performance of a particular job makes on normal workers without taking into account the individual abilities on performance of the workers concerned.”

Absenteeism

Absenteeism means the failure of a worker to report for work when he is scheduled to work.

Labour Turnover

Labour turnover refers to the rate of change in the workforce of an enterprise during a given time period.

Recruitment

Recruitment is the process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organisation.

Recruitment Policy

Recruitment policy specifies the objectives of recruitment and provides a framework for the implementation of the recruitment programme.

Selection

Selection involves picking for hire a subset of workers from the total set of workers who have applied for the job.

Interview

Interview is a face-to-face, observational and personal appraisal method of evaluating the applicant where the interviewer who is higher in status is in a dominant role.

Placement

It is a decision to place a selected individual in one job than in another.

Induction

It is the process of inducting a new employee into the new social setting of his work.

Promotion

A promotion takes place when an employee moves to a position higher than the one formerly occupied.

Dry Promotion

When there is no increase in the employee’s pay as a result of promotion it is called as a dry promotion.

Demotion

It is a downward movement of an employee in the organisational hierarchy with lower pay, status or responsibilities.

Transfer

A transfer implies a lateral movement of an employee in the hierarchy of positions with the same pay and status.

Training and Development

The organised procedure by which people learn knowledge and/or skill for a definite purpose is training.

Job Rotation

This type of training involves the movement of the trainee from one job to another.

Management Development Programme

It is a systematic process of growth and development by which the managers develop their abilities to manage.

Career

It is a sequence of separate but related work activities that provides continuity, order and meaning in a person’s life.

Motivation

It is defined as any idea, need, emotion or organic stage, that prompts a man to an action.

Job Satisfaction

It refers to the feelings and the emotional aspects of individuals experience towards his jobs,

Performance Appraisal

It is the systematic, periodic and an impartial rating of an employees’ excellence in matters pertaining to his present job and his potential for a better job.

Management By Objectives (MBO)

It is a process whereby the supervisor and subordinate managers of an organisation jointly identify its common goals, define each individual’s major areas of responsibility in terms of unit and assessing the contributions of each of its members.

Trade Unions

It is a voluntary organisation of workers formed to promote and protect their interests by collective action.

Collective Bargaining

It refers to a process by which employers on the one hand and representatives on the other, attempt to arrive at agreements covering the conditions under which employees will contribute and be compensated for their services.

Workers Participation in Management

It is a process by which authority and responsibility of managing industry are shared with workers.

Job Design

It is the process of deciding on the contents of a job in terms of its duties and responsibilities, on the methods to be used in carrying out the job, in terms of techniques, systems and procedures and on the relationships that should exist between the job holder and his superiors, subordinates and colleagues.

Important terms in Consumer Behaviour

Absolute Threshold: The lowest level at which an individual can experience a sensation.

Acculturation: The learning of a new or foreign (other country’s) culture.

Actual Self-Image: The image that an individual possess as a certain kind of person with certain characteristic traits, habits, behavior etc.

Advertising Wearout: Overexposure to repetitive advertising that causes individuals to become satiated and their attention and retention to decline.

Advetorials: Print ads which are laid out to resemble editorial material making it difficult for the readers to distinguish between the two.

Affective Component: It is a part of tri-component attitude model which reflect the consumer’s emotion or feeling with regard to an object or a person or an idea.

Affinity Group Marketing: A type of cause-related marketing targeted to members of a specific group.

Affluent Consumers: The consumers with household incomes which provide them with a disproportionate large share of all discretionary income.

AIOs: These are the psychographic variables that focus on Activities, Interests, and Opinions often referred to as Lifestyle.

Arousal of Motives: The motives which are often aroused on the basis of physiological, emotional, cognitive or environmental factors.

Attitude: It is the learned predisposition to behave in a favourable or unfavourable with regard to a particular thing.

Beliefs: These are the mental or verbal statements that reflect an individual’s knowledge and assessment about certain things.

Benefit Segmentation: A basis of segmentation which is based on the kinds of benefits that consumers seek for in a product or service.

Brand Equity: The value associated with a brand.

Brand Loyalty: Consistent preference and/or purchase of the same brand.

Brand Personification: Specific “personality-type” traits or attributes ascribed by consumers for different brands.

Cause-related Marketing: A form of corporate promotion in which companies try to motivate socially-aware consumers to buy their products by promising to contribute a portion of the sale to a specific cause.

Cognitive Component: A part of the tri-component attitude model which represents the knowledge, perception, and beliefs that a consumer has with respect to an idea or an object.

Cognitive Dissonance: The dissonance or discomfort that consumers experience as a result of conflicting information.

Compliant Individual: The individual who moves towards others and want to be loved, wanted, and appreciated by others.

Conative Component: A part of the tri-component attitude model which reflects a consumer’s likelihood or tendency to behave in a particular way with regard to an attitude-object.

Concentrated Marketing: It is targeting a product or service to a single market segment with a unique marketing mix.

Conditioned Learning: It results when a stimulus which elicits a known response that serves to produce the same response by itself.

Consumer Behaviour: The type of behavior which consumers display in searching for purchasing, using, evaluating, and disposing of products or services.

Consumer Learning: The process by which consumers acquire the purchase and consumption knowledge and experience they apply to future related behavour.

Consumer Profile: Socio-economic/Demographic/Psychographic profile of actual or proposed consumers for a specific product or service.

Counter segmentation: It is a segmentation strategy in which a company combines two or more segments into a single segment to be targeted with an individually tailored product or promotion campaign.

Cross-Cultural Consumer Analysis: Research to determine the extent to which consumers of two or more nations are similar in respect to specific consumption behavior.

Cues: Stimuli that give direction to consumer motives.

Culture: The sum total of learned beliefs, values, and customs which serve to regulate the consumer behaviour.

Demographic Segmentation: The division of a total market into smaller subgroups on the basis of such characteristics such as age, gender, marital status, education, occupation and income.

Detached Personality: An individual who moves away from others.

Differentiated Marketing: Targeting a product or service to two or more segments, using a specifically tailor-made product, promotion appeal, price etc.

Diffusion Process: The process by which the acceptance of an innovation is spread by communication to members of a social system over a period of time.

Ego: The part of personality that serves as the individual’s conscious control. It functions as an internal monitor that balances the impulsive demands of the id and the socio-cultural constraints of the superego.

Elaboration Likelihood Model (ELM): A theory which suggests that an individual’s level of involvement during message processing is a critical factor in determining which route to persuasion is likely to be effective.

Evoked Set: The specific brands a consumer considers in making a purchase choice in a particular product category.

Family Life Cycle: Classification of family units into significant groupings like Bachelorhood, Honeymooners, Parenthood, Postparenthood, and Dissolution.

Geographic Segmentation: It is dividing the market based on geographical territories.

Opinion Leader: A person who informally gives product information and advice to others.

Perception: It is the process by which an individual selects, organizes and interprets stimuli into meaningful and coherent picture of the world.

Positivism: A consumer behaviour approach that regards consumer behaviour discipline as an applied marketing science. It’s main focus is on consumer decision making.

Post-purchase Dissonance: The cognitive dissonance which occurs after a consumer has made a purchase commitment.

Reference Group: A person or group which serves as a point of comparison for an individual in the formation of either general or specific values, attitudes, or behaviour.

Social Marketing: The use of marketing concepts and techniques to win adoption of socially beneficial ideas.

Social Self-Image: It is how individuals feel others see them.

Stimulus: Any unit of input to any of the senses.

Superego: The part of personality that reflects society’s moral and ethical codes of conduct.

Use-related Segmentation: Popular and effective form of segmentation that categorizes consumers in terms of product, service, or brand image characteristics such as usage rate, awareness and degree of brand loyalty.

Use-situation Segmentation: It is segmentation which is based on the idea that the occasion or situation often determines what consumers will purchase or consume.

Word-of-Mouth Communication: It is informal conversations concerning products or services.

Important terms in Total Quality Management

Affinity Diagram: It is a technique of gathering and organizing large number of data or ideas, opinion and facts relating to a problem or project, and to identify natural patterns or groupings in the information.

Arrow Diagram: It is a mode of presentation of activity flow, which involves planning and constructing the essential steps from start to finish of a project or problem solution.

Appraisal Cost: Cost for evaluation of correctness and conformance of a product or service or process after the occurrence of the event. This is the cost incurred by a company to identify the quality conformance of products after they occur. This refers to activities relating to the check for conformances within the company and before the products are shipped out.

Audit: It is an examination of records to check their accuracy.

Bar Graph: A graphical means of data presentation by bars or columns.

Benchmarking: The term refers to a special quality improvement technique that seeks to understand and adopt the “best practice” of others who are world-class in their fields.

Best Practice: It is adopted in an for achieving the benchmarked level of performance, after understanding the process of superior performance.

Brainstorming: It is an idea generation technique which encourages a group of people to meet for discussing a common or broad issue for identifying the course of approach, route cause, solution or any other pertaining matters or problems.

Cause-and-Effect Diagram: It is a technique of graphical presentation used to identify and relate causes and sub-causes with a particular effect or result.

Continuous Improvement: It is a term adopted by ISO 9000 standards and 2000 standards version, which refers to discontinuous but repetitive activity for improvements.

Control Charts: It is a graphical representation of the characteristic of a process around the central line and one or more control limits.

Cost of Quality: It is the measure of cost incurred for not doing things ‘first time right’ in order to meet the customers’ total requirements. It is the difference between the actual cost of making and selling the products or services and the cost if there were no failures during manufacturing or use of the same and no possibility of failure either.

Creativity and Innovation: Creativity is the ability of a person to discover a new relationship or ideas that has not existed before, and innovation refers to the new method or approach by which the new idea can be implemented.

Critical Path Method (CPM): It refers to the measurement of critical path in the arrow diagram analysis of a project work, where the critical path is the longest path through the network in terms of time dimension.

Cycle Time: It refers to time performance i.e., time required to fulfill the commitments or to complete the tasks.

Defect: It refers to any non-conformance of the product or service with that of agreed parameters or customer requirements. Defect is an attribute, and expressed as attribute data.

Economic Value Addition (EVA): It is a performance indicator in terms of cost of capital employed versus the earnings of a company. It includes the interest outgo for the capital (i.e., the interest that would have been paid had the entire capital been borrowed from the market at a market rate) and earnings mean net profit after taxes and other payables, which can be distributed to stakeholders.

Flow Chart: It is a graphical representation, which symbolically shows the sequential flow of activities in a process that produces an output. Flow charts can be of different types, like Process flow chart, Work flow diagram, Resource deployment flow chart etc.

Histogram: It is a vertical bar chart that displays the data in an arranged way to illustrate the frequency distribution of the measured data values.

Inspection: It is a method of examining, and measuring when necessary, for identification of any defects or short coming of any features or tolerances in a product.

ISO 9000: It is a set of quality system standards that define and guide basic elements of quality systems that companies should use to ensure their products and services meeting or exceeding, customer expectations. The standards cover the specific requirements in areas of quality of design, production, installation, testing and inspection, and services. Standards under ISO-9000 banner call for documentation of all processes affecting quality and compliance of the documented systems and procedures.

Just-in-Time: It is a management philosophy applied in production methods and manufacturing with a view to incorporating systems of producing ‘what is needed when it is needed’. This approach implies the production of exactly what is needed, at the time when it is needed, and not maintaining any extra or safety stocks in the production processes.

Kaizen: It is a Japanese concept that means continuous improvement. Kaizen philosophy is based on the belief that a great number of small improvements over a time will lead to substantial cumulative improvement in organisation’s performance.

Non-conformance: Attributes or measured units of data on a given product or part that do not meet the specification limits.

p-Chart: It is a control chart used to evaluate performance of a produces outcome based on the fraction or percentage defective in a sample whose size is either constant or varying.

Pareto Chart: A vertical bar chart that displays the relative importance of categories of problems under study or the conditions. The items are arranged in descending order from left to right, and help to separate the vital few important items from the less important trivial ones. The plot and the concept of identifying vital few gave rise to the important statistical distribution rule of 80:20.

P-D-C-A Cycle: This is the cycle of sequential activities of Plan-Do-Check-and Analyse that are used for problem solving or process improvement. Essence is to plan from present data and information about what one needs to do, implementation by doing the planned activities, analysis of results by study, evaluation and monitoring, standardization of actions and processes for consistency of results, and then repeating the cycle for continuous improvement. This is also known as ‘Deming Cycle’ after the name of its enunciator. It is also termed as P-D-S-A i.e., Plan, Do, Study and Act.

PERT (Programme Evaluation and Review Technique): This is a time-event network analysis system in which various events in a project are identified with a planned time frame for each. These events are shown in the network depicting relationship of each event with the other events.

Poka-Yoke: It is a mistake-proofing system that uses automatic devices or methods to avoid the consequences of simple human error. The idea is to avoid repetitive tasks or actions that depend on memory or vigilance efforts by people, and instead allow people to apply their mind and creativity to value adding jobs.

Process: This refers to linked activities combining the people, equipment, materials, methods and environment with the purpose of producing a product or service for customers within or outside the company. In other words, a process converts the inputs to acceptable value-added outputs for customers.

Process Owner: A person assigned responsibility for a process because of his or her capability to lead a team and personal influence to contribute and make decisions or any one whose performance is measured in terms of success of the process. Process owners are specially trained and empowered employee of the company.

Productivity: It refers to the output to input ratio within a time period and with due consideration for quality. The term is widely used in industries in context of getting higher output for creating profit through productive operations. Productivity is often taken as the measure of efficiency of the use of resources.

Quality: The totality of features and characteristics of a product or services that bear on its ability to satisfy the customer needs and expectations.

Quality Assurance: This has been defined by ISO as: the procedure consisting of all planned and systematic activities implemented within the quality system, and demonstrated as needed, to provide adequate confidence that an entity will fulfill requirements for quality. The quality assurance procedures aim for prevention or detection of non-conformance at the earliest stages, and as such, involve control of quality vendor items, methods and tools planning, in-process control by using simple statistical tools (control charts), analysis for improvement, and audits of outgoing products or services.

Quality Control: This refers to methodology to control the quality of outgoing products as per stipulated specification by means of inspection and sampling technique. Quality control procedure is primarily concerned with the inspection and certification of outgoing quality by checking at specific points within the process.

Quality Council: A senior management team responsible for establishing quality improvement items, policies and plans in the organisation, and then facilitating the quality improvement programmes by resource allocations and monitoring.

Quality Circle: It refers to a self-motivated group of workers who choose to work out solution of common quality problems or an improvement project by regularly meeting together and sharing responsibility.

Quality Function Deployment (QFD): It is a methodology used to ensure that customers’ requirements are met throughout the processes of product design, process design and operation of production systems.

Quality Manual: It is the principal document that describes a company’s quality policy, quality system, quality commitment, and documentation structure. This is a relatively short document that affirms the management’s quality commitment, and functions as the ‘quality system guide’ in the organisation for examining adherence and conformance to ISO-9000 standard.

Quality Policy: It is a policy statement of an organisation’s commitment to quality by stating what, why and how it intends to achieve the stated level of quality. It is a statement that goes into the design of quality system for customer satisfaction.

Quality Procedure: It is functional document under ISO-9000 system that set forth the policy, responsibility and obligation for quality related tasks that affect quality performance within the quality system.

QS-9000: This is a ‘Quality System Requirement’ system defining the fundamentals of a quality system that must be adhered to ensure defect prevention and the reduction of variations and waste in the supply chain of internal and external suppliers of production and service parts and materials. It emphasizes on defect prevention and continuous improvement.

R Chart: A control chart that plots the range of sample data values as a function of time, sequence or lot number.

Re-engineering: It is a fundamental rethinking and radical redesign of business processes in order to achieve dramatic improvement in areas of critical performance, such as quality, cost, service and efficiency.

Restructuring: It refers to the reorientation an dredesign of an organisation’s work structure from function based to process based, running across other functions.

Run Chart: It is a graphical plot of a measurable characteristic of a process versus the time.

Six Sigma: It is a quality matrix that counts the number of defects per million opportunities (DPMO) at six ‘Sigma levels’.

Statistical Process Control (SPC): It is a method of measuring the variability of a process by using control charts, and determining the capability of the process to produce a particular part.

Statistical Quality Control (SQC): It is a method of measuring and controlling the process outputs in terms of the specification by adopting statistical techniques, such as sampling and sampling error measurement, run chart, calibrations of equipment and measuring gauges, statistical analysis of results, cause-and-effect studies etc.

Standards: It is an agreed document that includes the stated and implied requirements and expectations of customers, which should be implemented and adhered to in practice for performance.

Standardisation: It refers to the process of setting or adopting standards for meeting the requirements of consumers.

Stakeholeders: They are individuals or parties who have some interest or stake in the well-being or performance of a company. They can be in the form of customers, employees, suppliers, shareholders, society etc.

Steering Committee: It is a management team (mostly drawn from middle or senior management) assigned with the responsibility of guiding a task and deploying measures for achieving a set objective.

Supplier: They are the source of supply of materials, goods or services to a company.

Supply Chain Management: It refers to the process management where suppliers, sub-contractors and the customer company are linked up in the chain of activities that relate to production, value-addition and delivery of goods and services with a view to satisfying the customers’ needs.

Total Quality Management (TQM): It is an integrated system approach of customer-focused management where all employees are drawn into the process of continuous improvement an dcustomer satisfaction by redesigning the processes and integrating the processes and activities into a chain of quality delivery processes, including the supply chain and internal customer chain, in order to achieve superior business performance.

Tree Diagram: It is a management tool used for analysis and planning where issues, activities or ideas are systematically broken down until an actionable solution emerges from the analysis.

Value Analysis: This refers to a step in product design for customers where function of every component of a product is analysed to determine how it might be improved in the most economical way.

Value chain: It refers to a series of activities or processes that are designed and managed in an organisation in order to add value to the product or service at each stage so that the sum total of result help the company to earn better margin.

World class: This term is used in terms of describing the quality standard of a product or service as the best in its class, considering the global availability.

X-bar Chart: This is a variable data control chart that plots the mean of data values as a function of lot number or time or sequence.

x-R chart: A pair of charts used to plot individual data values, x1 and the range between data values R. It is also known as individual or moving average control chart.

Zero-Defects: This refers to a concept of preventing the occurrence of defects to a very low level, approaching to zero level.

Important Terms in Production and Materials Management/ Operations Management

Production Management: is concerned with the transformation of resources into goods and/or services.

Plant Layout: is also referred to as facility design or facility layout. After having decided the location and site, the next step is to draw out a floor plan indicating the location of the various work centres, plants and associated offices, and supporting facilities.

Job Production: These are products manufactured to meet the special requirement of customers for large projects, e.g., ship building, large engineering construction etc.

Batch Production: Involves manufacturing a number of identical products in batches to meet specific one-time requirement or periodic requirements.

Continuous Production: involves specialized manufacture of large quantity of identical items and it is of two types:

Mass Production: A large number of identical products (standardized) are produced through a fully automated product lines.

Flow Production: A number of work centres are arranged in a particular sequence and the products pass from one work centre to another work centre.

Fixed Position Layout: Here, the major equipment remains in a fixed place and all tools, machines, men and material are brought to it. The job is completed without the major equipment leaving the location.

Process Layout: Here, the machines and services are grouped on a functional basis and operation of the same type are performed in the same area. For example, all welding work is carried out at one place and all turnings in another.

Product Layout: Here, the machines are laid out in operation along the flow lines. This is also referred to as a line layout. Here, the material flow in continuous at a uniform rate and operations are carried out as balanced by various machines. There is simultaneous working going on at each station. This layout is used when the volume of production is very high and the nature of work is standardized.

Combined Layout (Group Technology): Generally, the best solution is the fombination of the process and product layout foor batch productions. Each process is set up as a unit and these units are arranged into a product layout.

Break-even Analysis: based on fixed cost, variable cost and no. of quantities produced

Assembly-Line Balancing: Factories having a large volume of production of standardized equipment and components having a continuous flow, prefer to use conveyor type of assembly line. Here the work centres are sequenced in such a way that at each stage a certain element of total job is carried out so that at the end of the conveyor line, the final product comes out. This requires careful pre-planning to lay down the line and balance the time between each work centre so that idle or waiting time is minimized. This process of internal balancing is called assembly-line balancing.

Resource Planning and Levelling: With the advancement of technology, production and operations have become a specialized area requiring professional management. Production and operations management consists of various activities which are interrelated and complex in nature. It requires a higher order of conceptual, technical and human relations skills to achieve the two objectives of optimization of resources and conservation of time and money.

Scheduling: refers to the process of preparing a time target for all production operations including setup and other preparation time in executing a production order in the manufacturing organisation.

Material Control: is the process of providing quantity and quality of materials needed in the manufacturing process with an eye on economy in storage and ordering cost, purchase price and working capital.

Inventory control: refers to the process whereby the investment in materials and parts carried in stock is regulated within predetermined limits in accordance with inventory policy established by the management.

Maximum Level: represents the level beyond which the stock in hand is not allowed to exceed.

Minimum Level: points to the level below which the stock in hand shall not be allowed to fall.

Order Level: is the quantity of stock (level) fixed between the maximum and minimum levels of stock. When this level is reached, it becomes the duty of the stores incharge to initiate purchase so as to replenish the stock within reasonable times. It is usually little higher than the minimum in order to be prepared for such emergencies as abnormal usage of materials, unexpected delays in delivery of new supplies, etc.

Danger Level: is below the minimum level and represents the stage at which emergency and immediate steps have to be taken for getting the stock replenished.

Economic Order Quantity: is referred to as the size of the order that gives maximum economy in purchasing the materials. It is also known as Optimum or Standard Order Quantity.

Ordering Cost: is referred to as the cost of placing an order and securing the supplies.

Inventory Carrying Cost: refers to the cost of keeping the materials in the storehouse which includes i. capital cost, ii. Cost of storage and handling, iii. Cost of deterioration and obsolescence, and iv. Other kinds of expenses and losses during storage.

Working Stock: is procured periodically for normal working and is consumed at a certain rate. It consists of quantities which are replenished periodically. An ideal working stock a saw tooth.

Safety Stock: Because of such a threatening behavior of inventory, additional stock is kept on hand as a reserve so as to avoid temporary shortages or stockout situations. Such an additional stock goes by the name of safety stock, reserve stock or buffer stock.

ABC Analysis: is a basic materials management analytical tool. It may be applied to any branch of management with ease and success. It is popularly known as Always (A) Better (B) Control (C).

V.E.D. Analysis: V.E.D. is fully stretched as Vital, Essential and Desirable analysis. VED classification is also in the nature of ABC classification though it is largely applicable to spare parts. Spare parts are classified as Vital, Essential and Desirable according to their requirement. Spare classified V (Vital) are stocked adequately to ensure smooth plant operation.

XYZ Analysis: XYZ analysis usually is resorted to at the time of stock-taking at the end of a period. X items are those whose inventory value is high. Z items are those whose inventory value is low. Y items fall between these two extremes. XYZ analysis, therefore, is helpful in taking stock of those items which are classes as items of highest value, moderate and low value.

FSN Analysis: is based on movement of items in the storehouse. The items are classified as Fast Moving (F), Slow Moving (S), and Non-moving (N). This classification is done on the basis of consumption pattern of the items under analysis.

Fixed Order System: Here, materials are replenished as and when required. As per predetermined policy, certain replenishment points are fixed and when the materials reach those points, appropriate action is taken. This system is also known as “review system.”

Two-Bin System: is based on the segregation of the total into two bins – one sufficient to satisfy demand between the arrival of the order and the placing of the next order, the second contains enough stock to satisfy probable demands during lead time.

Kardex System: It is an improved form of loose leaf ledgers which came into use when the necessity of having a stricter control of inventories arose. In this system, cards are vertically arranged in a metallic tray and kept in Kardex cabinets specfially manufactured for the purpose.

Important terms in Business Communication / Managerial Communication

Communication: It is the process by which information is transmitted between individuals and/or organisations so that an understanding takes place.

Internal Communication: It is the communication which takes place within an organisation.

External Communication: It is the communication which takes place between an organisation and outside agencies like Govt., distributors, retailers, customers etc.

Audio-Visual Communication: It encompasses television and cinema films.

Computer-based Communication: It includes the message sent through e-mails, voice mails, mobile communications etc.

Downward Communication: It flows from a superior to a subordinate. It includes, orders, individual instruction, policy statements, circulars etc.

Upward Communication: It flows from a subordinate to a superior. It includes providing feedback, constructing suggestions etc.

Horizontal Communication: It is the communication which takes place between departments or people belonging to the same level in an organisation.

Grapevine: It is an informal channel that operates in an organisation. It follows no set lines, nor any definite rules, but spreads like grapevine in any direction, anywhere, and spreads fast.

Single Strand grapevine communication: It involves passing of information through a long line of persons to the ultimate recipient.

Gossip: Here, an individual actively seeks and tells everyone. It operates like a wheel.

Probability grapevine communication: It is the chain in a random process in which an individual transmits the information to others in accordance with the laws of probability and then these others tell still others in a similar manner. The chain may also be called random chain.

Cluster grapevine communication: Here, an individual tells selected persons who may in turn relay the information to other selected individuals. Most of the information communication follows this chain.

Business Letter/ Correspondence: It is the formal communication that takes place between organisations or between an organisation with its customers or between and organisation and its stakeholders.

Meeting: The formal or informal assembly of individuals for discussion is referred to as a Meeting.

Minutes of Meeting: The written recording of an official proceeding is referred to as Minutes of Meeting.

Important terms in Principles of Management / Fundamentals of Management / Management Concepts

Management: The art of getting things done through others. It is the process of planning, organising, leading and controlling the efforts of organisation for achieving the stated organisational goals.

Planning: is looking ahead. It involves preparation for the future. Here, outlining of future course of action takes place.

Organising: It is defining and grouping the activities of the enterprise and establishing authority, responsibility and relationships among them.

Staffing: includes human resource planning, recruitment and selection of the right people, training and developing them, deciding financial compensation, and appraising their performance periodically.

Communication: It is the process of passing information from one person to another person.

Leadership: Process by which a manager guides and influences the subordinates to work.

Motivation: The act of stimulating the employees working in the organisation.

Front-Line Managers: are the lowest level managers in the organisational hierarchy. They are called by the name foreman, supervisor, etc.

Middle Level Managers: work in between the lower and top level managers. The may in the form of area managers, departmental heads, zonal/regional managers.

Top Level Managers: are the executives working at policy making level of an organisation. They would be in the form of Functional Managers, General Managers, Vice-Presidents, Managing Directors, Board members, CEOs, and Chairmans.

Technical Skills: Ability to use the tools, equipment, procedures, techniques and knowledge of a specialized field.

Human Skills: These are the people skills required for playing the liaison role for middle level managers most of the time.

Conceptual Skills: Decision making skills required for top level executives in order to formulate policies and strategies.

Strategic Planning: Process of determining long-term objectives of an organisation.

Mission: A statement which refers to the role an organisation plays in the society.

Policies: Statements of understanding that guides the thinking and action in decision-making.

Procedures: Tasks to be performed in a sequential manner.

Rules: A prescribed course of action that states what is to be done and what not to be done.

Programmes: A comprehensive plan that includes future use of different resources in an integrated pattern and establishes a sequence of required actions and time schedules for each in order to achieve stated objectives.

Budgets: A plan-statement for a given period of time in future expressed in financial or physical units.

Programmed decisions: These are decisions which are repetitive in nature.

Non-programmed decisions: These are decisions which are non-routine in nature.

Brainstorming: It refers to continuous interaction through free discussions for spontaneous and creative thinking. It is mostly used for developing new ideas in organisations.

Management By Objectives (MBO): It is a process whereby the superior and subordinate managers of an organisation jointly identify the common goals, define each individual’s major areas of responisibility in terms of the results expected of them, and use these resources as guides for operating the unit and assessing the contribution of each of their members.

Objectives: These are the targets to be achieved by an organisation.

Organisation Chart: It is a diagram of all the positions in an organisation and their formal relationships to one another.

Span of Control: It refers to the number of subordinates who can report directly to a superior (manager).

Departmentation: It is the process of dividing the organisation into manageable subunits.

Delegation: It is the process by which authority is granted to a subordinate by his superior.

Authority: It is the right to command.

Decentralisation of Authority: It involves the transfer of authority in the organisation context from top to the lower rungs of management in the hierarchy.

Motivation: It refers to the way in which urges, drives, desires, aspirations, and needs that direct and control the behaviour of human beings.

Leadership: It is the process by which an executive imaginatively directs, guides and influences the work of others in choosing and attaining specified goals by mediating between the individuals and organisation in such a manner that both will obtain maximum satisfaction.

Autocratic or Authoritative Leader: An autocratic leader is a person who determines policies without consulting others but simply tells others for further action.

Democratic Leader: A democratic leader is one who gives instructions only after consulting others.

Free Rein Leader: a free rein leader leaves the group entirely to itself.

Paternalistic Leadership: Here, the leader assumes his function as one which is paternal (fatherly) in nature.

Grapevine: The informal communication which supplements the formal organisational relationship is referred to as ‘Grapevine’ communication.

Horizontal Communication: When the flow of communication takes place at employees of same level it is referred to as horizontal communication.

Downward Communication: Flow of communication from top to the bottom is referred to as downward communication.

Upward Communication: When the flow of communication takes place from bottom to top, it is referred to as upward communication.

Budget: It is a statement of anticipated results during a designated time period expressed in financial and non-financial terms.

Break-even Point: It is that point at which the cost and revenue of the enterprise are exactly equal. Here, an organisation neither earns a profit nor incurs any loss.

HR Accounting: It is the method of reflecting the rupee value of the human assets in the company’s balance sheet.

Entrepreneurs: They are the people who identify new opportunities and exploit them.

Attitude: The cluster of beliefs, feelings and behavioural intentions towards an object.

Behaviour Modification: A theory in behavioural science that explains learning in terms of the antecedents and consequences of behavior.

Behavioural Audit: A diagnosis of cultural relations between companies prior to a merger and determination of the extent to which cultural clashes are likely to occur.

Brainstorming: A freewheeling face-to-face meeting where team members are not allowed to criticize but are encouraged to speak freely in order to generate as many ideas as possible for building on the ideas of others.

Change agent: Anyone who possesses enough knowledge and power outside the group by pooling the resources and power of its members.

Cognitive Dissonance: A psychological tension that occurs when people perceive an inconsistency between their beliefs, feelings and behavior.

Conflict: The process in which one party perceives that its interests are being opposed or negatively affected by another party.

Emotional Intelligence: The ability to perceive and express emotion, assimilate emotion in thought, understand and reason with emotion, and regulate emotion in oneself and others.

Emotions: Psychological episodes toward an object, person, or an event that create a state of readiness.

Employability: An employment relationship in which people perform a variety of work activities (rather than holding specific jobs) and are expected to continuously learn skills that will keep them employed.

Need for Achievement (nAch): A learned need in which people want to accomplish reasonably through their own efforts.

Need for Affiliation (nAff): A learned need in which people seek approval/conformation from others for their wishes and expectations.

Need for Power (nPow): A learned need in which people want to control over other others.

Need: Deficiencies that energize or trigger behavior.

Negotiation: Two or more conflicting parties attempt to resolve their divergent goals by redefining the terms of their interdependence.

Organisational Behaviour: The study of what people think, feel, and do in an organisation.

Organisational Culture: The basic pattern of shared assumptions, values and beliefs governing the way employees within an organisation think about and act on problems and opportunities.

Organisational Design: The process of creating and modifying organisationa structure.

Organisational Politics: Behaviours that people perceive as self-serving tactics for personal gain at the expense of others in an organisation.

Organisational Structure: The division of employees and the pattern of co-ordination, communication, work flow, and forma power that direct an organisation’s activities.

Organisation: Groups of people who work interdependently toward attainment of common objectives.

Perception: The process of receiving information about and making sense of the world around us.

Personality: The relatively stable pattern of behaviours and consistent states that explain a person’s behavioural tendencies.

Positivism: A view held in quantitative research in which reality exists independent of perceptions and interpretations of people.

Power: The capacity of a person, team, or organisation to influence others.

Process Consultation: Helping an organisation to solve its problems on its own by making it aware of organizational processes, the consequences of those processes, and the means by which they can be changed.

Punishment: A means of decreasing the frequency or future probability of a behavior through the introduction of a consequence.

Referent Power: The capacity to influence others based on the identification and respect they have for the power holder.

Refreezing: The latter part of the change process in which systems and conditions are introduced that reinforces and maintains the desired behavior.

Role Ambiguity: A lack of clarity and predictability of the outcomes of one’s behavior.

Role Conflict: Incompatibility of expectations associated with a person’s role.

Role Perception: A person’s beliefs about the specific task assigned to him or her, their relative importance, and the preferred behavior to accomplish those tasks.

Self-Efficacy: A person’s belief that an individual has the ability, motivation, and resources to complete a task successfully.

Stakeholer: They include the shareholders, customers, suppliers, Government and other groups with a vested interest in the organisation.

Stereotyping: The process of assigning traits to people based on their membership in a social category.

Stress: An individual’s adaptive response to a situation that is perceived as challenging or threatening to the person’s well-being.

Team Building: Any formal activity intended to improve the development and functioning of a team.

Utilitarianism: The moral principle stating that decision makers should seek the greatest good for the greatest number of people when choosing among alternatives.

Valence: The anticipated satisfaction or dissatisfaction that an individual feels toward an outcome.

Values: Stable, long-lasting beliefs about what is important in a variety of situations, which guide our decisions and actions.

Workaholic: A person who is highly involved in work, feels compelled to work, and has a low enjoyment of work.

Workplace Bullying: Offensive, intimidating, or humiliating behavior that degrades, ridicules, or insults another person at work.